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Iran-US standoff has India’s rice exporters on edge.

Date: 11-01-2020
Subject: Iran-US standoff has India’s rice exporters on edge
KARNAL: Growing tensions between Iran and the US have made trade body, All India Rice Exporters’ Association (Airea), decide to stop exports, especially of basmati rice, to Iran until the situation normalises as exporters are worried about their payments getting stuck in the trouble-torn Islamic nation. Airea has decided to export rice against advance payment or the letter of credit (LC). 

The rice exporters said they would not take any risk since their payments of around Rs 1,400 crore were stuck in Iran, which is the biggest market for Indian basmati rice, including Pusa Basmati 1509 and Pusa 1121. They fear that if the situation does not improve, it would badly impact rice growers and exporters both. 

In Haryana, basmati is largely grown in Karnal and adjoining districts. Area under paddy in the 2019 kharif season was 1.72 lakh hectares in Karnal district, of which around 40% was under basmati. There are around 40 rice exporters who trade with Iran and other countries. 

Leading exporter and former president of Airea, Vijay Setia said Iran was an important trade partner for India. “In 2018-19, India exported 14 lakh metric tonnes (LMT) of basmati rice to Iran, but in the 2019-20 fiscal, only 7 LMT could be exported so far. Around 7 LMT of rice was to be exported to Iran in the next three months. Due to the current situation in Iran, we will have to focus on local market, which may lead to a fall in the prices,” he said. 

He said the crisis has also impacted rice prices in the international market. “We have trust in Iranian buyers and want to continue the trade, but due to the growing Iran-US tensions, the association has issued an advisory to stop rice exports immediately or send rice against advance payment. Iran has released around 40% payment out of rice imports worth Rs 1,200 crore, which was stuck since May 2019. In December last year, rice valued at around Rs 500 crore has been exported to Iran. The Indian exporters are yet to receive payments amounting to Rs 1,400 crore from Iran. We want security for our payment,” he said. 

Talking to TOI, Airea president Nathi Ram Gupta alleged, “Our payments worth Rs 900 crore are due on Iran for the past several months due to which we stopped further export. The Indian government is also not intervening in the matter due to which millers are a harried lot. The issue will not be sorted out till India stops buying crude oil from Iran. When we ask the government to look into the matter, we are told to send rice by taking money in advance. It says the millers are responsible for their payment.” 

Currently, the Pusa 1121 variety paddy is available in the range of Rs 2,500-2,800 per quintal in the Karnal grain market. Last season, its rates were in the range of Rs 3,200-3,700 per quintal. 

Haryana Rice Exporters Association president Amarjit Chhabra said the state alone contributed 40% of the total basmati rice exports made by India. “We are worried about our payment and decided to export rice by taking money in advance,” he said. 

He added that India exported around 40 lakh metric tonnes rice to several countries — including basmati and non-basmati varieties — of which Haryana and Punjab were the major exporters. “Iran is buyer of 40% of Pusa 1121 basmati from India. A meeting of all India rice exporters was held in Delhi a couple of days back in which it was decided to hold the delivery to Iran till the issue was sorted out. We came to know that payment of 50% of rice exports to Iran were pending and if crisis escalated India’s exporters would be badly hit,” he said. 

In 2018-19, Iran accounted for 32.89% (14.8 lakh metric tonnes) of India’s total basmati rice exports valued at $ 1559.6 million. In 2017-18, the basmati rice exports to Iran from India were around 8.77 LMT worth $ 904 million. 

Source: timesofindia.indiatimes.com

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